Optimal supplier choice with discounting

B Goldengorin, J Keane, V Kuzmenko and M K-S Tso ()
Additional contact information
B Goldengorin: University of Groningen
J Keane: University of Manchester
V Kuzmenko: Glushkov Institute of Cybernetics, National Academy of Sciences of Ukraine
M K-S Tso: University of Manchester

Journal of the Operational Research Society, 2011, vol. 62, issue 4, 690-699

Abstract: Abstract This paper investigates a model for pricing the demand for a set of goods when suppliers operate discount schedules based on total business value. We formulate the buyers's decision problem as a mixed binary integer program, which is a generalization of the capacitated facility location problem (CFLP). A branch and bound (BnB) procedure using Lagrangean relaxation and subgradient optimization is developed for solving large-scale problems that can arise when suppliers’ discount schedules contain multiple price breaks. Results of computer trials on specially adapted large benchmark instances of the CFLP confirm that a sub-gradient optimization procedure based on Shor and Zhurbenko's r-algorithm, which employs a space dilation in the direction of the difference between two successive subgradients, can be used efficiently for solving the dual problem at any node of the BnB tree.

Keywords: allocation; decision support systems; integer programming; location (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1057/jors.2009.164 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:jorsoc:v:62:y:2011:i:4:d:10.1057_jors.2009.164

Ordering information: This journal article can be ordered from
http://www.springer. ... search/journal/41274

DOI: 10.1057/jors.2009.164

Access Statistics for this article

Journal of the Operational Research Society is currently edited by Tom Archibald and Jonathan Crook

More articles in Journal of the Operational Research Society from Palgrave Macmillan, The OR Society
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().